1. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net FITCE 2007 Warsaw Joe Martucci, Anne Elvidge, Jerome Villez BT

2. Introduction On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net 1 Drivers 2 Strategic Options 3 Benefits 4 Risk 5 Cost and Timescales 6 Evaluation Conclusion Agenda

3. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Introduction Analysis of factors influencing the business case for Next Generation Networks This presentation explores the influencing factors behind the Next Generation Network business case by analysing the component parts of such a business case. The work draws on BTs experience working with many different operators not just BT’s 21C This work benefits from work done in the following areas: i ii iii BTs 21C Next Generation Network as well as external consultancy Analysis of cost and business modelling work done within BT Design Our experience of what drives Operators to move to an NGN Lessons learnt through BT’s Global Venture NGN consultancy Cost modelling, Optimisation Modelling, Financial Modelling Different Operators will be influenced by different drivers

4. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Drivers Analysis of the drivers that push the business case for Next Generation Networks Drivers will come from one of three general areas, Gaining Competitive Advantage, Keeping up with the Competition and Enforcement by Third Party Organisations. Any one of these can drive the business case. Drivers for change: i ii iii Gaining Competitive Advantage Keeping up with the Competition Enforcement by Third Party Organisations Lower Costs, Better Quality, Greater Flexibility First Mover Advantage verses Wait and See and Move Later Offcom, Regulator 1

5. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Products Markets Existing New Product Development Market Development Diversification Strategic Options Having identified the driver for an NGN what strategy do you need to employ Once the drive for an NGN is established work is required to define what that NGN should look like. Are market penetration and cost leadership a top priority or do product development and integrated cost leadership/Differentiation strategies mean more? 2

6. Economies of Scale Reduced Operational Costs Off the Shelf Equipment Quicker to Market with Services On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Benefits Analysis of the benefits to be expected from moving to an NGN The strategic option selected should lead to a set of tangible and measurable benefits that will later help to verify (or not) the success of the NGN venture 3 General Categories in which the benefits of an NGN can be identified and measured i ii iii iv v vi vii Flexibility of Services New Revenues and Market Segments Better Customer Experience

7. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Risks 4 Analysis of the risks that need to be monitored: The downside of potential benefits are the risks involved in any venture. These need to be identified and an attempt made to measure their probability of occurrence and impact on the overall NGN venture. Strategic Technological Financial Organisational and People Risk areas: i ii iii iv Cost Leadership and Differentiation, Brand Maturing Technology Large Investment, Cash Flow Training, Processes, Restructuring, Morale

8. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Cost and Timescales 5 Analysis of cost and timescale drivers for technology change For this analysis the principle activity is to identify and understand the cost drivers that are influencing the NGN project primarily aimed at CAPEX and OPEX spend lifecycles but also looking at potential revenues if a compelling case is not achieved on CAPEX and OPEX alone. Compare the do nothing case against introduction of NGN Include cost of migrating legacy networks and running costs pre migration Business Case; Establish the parameters and peak expenditure limits for the business case Q1Q2Q3Q4 Q1Q2Q3Q4 Q1Q2Q3 Revenues & Margin Pressures Costs CAPEX Free Cash Peak Funding Payback £ Business Case Parameters Next Generation Network Scenario Do Nothing Scenario Costs Time Cost Pre-MigrationPlatform NGN Only Costs

9. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Economies of Scale Reduced Operational Costs Off the Shelf Equipment Quicker to Market with Services Flexibility of Services New Revenues and Market Segments Better Customer Experience Evaluation Measurement of the benefits to be expected from moving to an NGN The set of benefits previously identified need to be measured in order to verify the success (or failure) of the NGN venture – measure these before implementing your NGN! 6 Benefits of an NGN and their units i ii iii iv v vi vii Unit Cost per Unit Volume Opex Expenditure Time, Cost, Quality Lead Times Portfolio Revenue Streams Customer Satisfaction Surveys

10. On the Factors Influencing the Business Case for Next Generation Networks dariusz.rozanski@szczesliwice.net Conclusion Identifies the factors influencing the business case for Next Generation Networks This presentation has explored the influencing factors behind the Next Generation Network business case by analysing the component parts of such a business case. Though the six steps will be common to every business, each case will be unique and reflect the importance an operator assigns to the different factors The factors affecting an NGN business case have been outlined Important Factors Differ for Each Operator Drivers Not Just Financial Many Benefits to be had but there are Risks to Manage NGN Cost versus Business as Usual Evaluation key to Determining Whether or Not an NGN is a Success i ii iii iv v vi Main Conclusions:

11. Name: Surname: Company: Phone: E-mail: Joe Martucci BT +44 (0)207 777 6465 joe.martucci@bt.com dariusz.rozanski@szczesliwice.net Anne Elvidge BT +44 (0)1248 360 186 anne.elvidge@bt.com Jerome Villez ZSTAR Expansion +44 (0)7710 399 642 villezj@yahoo.com Personal Details Feel free to give us a call to discuss anything in this presentation.